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As Kent County prepares to take possible legal action against the state over a settlement Lansing made regarding child care, county commissioners will soon adopt a more costly budget for the state Department of Human Services’ child care fund.

The 2010 DHS budget, which goes into effect Oct. 1 and is split between the state and county, will total nearly $14 million — up by more than $4 million from 2007. The county’s share is $7 million. Three years ago, it was $4.8 million. The money will come from the county’s general operating budget, which is facing a deficit of up to $15 million next year.

“They are of a different management than what we have here,” said Assistant County Administrator Wayman Britt about the state and county philosophies regarding budgets.

“There is a minimal impact that we can have based on how they’ve managed,” he added.

The county, though, did make a fairly significant move about a year ago when it took over the fund’s check-writing duties from the state in an effort to keep a closer watch over expenditures. The state used a cash-basis accounting system and the county converted the fund to an accrual method.

Fiscal Services Director Robert White said 2010 will mark the third consecutive year that expenditures from the child care fund will top inflation and revenue growth. In 2008, spending from the fund was nearly 19 percent higher than in 2007 — almost 12 percent higher this year than in 2008 — and is estimated to be 8 percent more in 2010 than this year. No new programs or services are contained in the new budget.

Britt recently told DHS that it wouldn’t be getting any more supplemental increases from the county, as Kent has made the last two years. He also told state officials that they need to cut the department’s expenses. Talks between the state and the county over this issue have been going on for the better part of a year.

As for the potential lawsuit, county commissioners recently gave administrators a green light to proceed with legal action.

“We are only in the prep stages, as the attorneys are working on that. We are continuing to dialog with the state because (the lawsuit) is the last resort,” said Daryl Delabbio, county administrator and controller.

The county is trying to convince Lansing legislators to hold counties harmless from the state’s decision to settle the suit.

“We don’t have to file. We don’t want to. Our intent is to try to work with the state,” said Delabbio.

The legal issue revolves around a settlement DHS and Gov. Jennifer Granholm reached a year ago with Children’s Rights. The New York children’s advocacy group claimed the state’s foster care and juvenile services programs weren’t being properly managed and filed a class-action lawsuit on behalf of the 19,000 children in the system.

The state settled the case for $200 million, money that is reportedly to be added to the DHS budget over the next four years, and has indicated that Michigan’s 83 counties will be liable for up to $128 million of the settlement.

“The state estimates it will cost them $200 million over the next four years. Counties could be responsible for up to $128 million during this same time period,” said Roger Morgan, commission chairman.

Kent commissioners see the county’s share — $4 million a year for at least the next four years — as an unfunded mandate because none of the counties were advised of or were part of the settlement. They argue that the directive from Lansing violates the Headlee Amendment to the state Constitution.

“When the state requires a local municipality of any type — a city, township, village or county — to provide services, under the Headlee Amendment the state is supposed to provide funding for those new services,” said Linda Howell, assistant corporate counsel for the county.

State lawmakers still have to include the cost for the additional services and personnel in the DHS budget. The settlement shares for all counties are being assessed in tiers, with the state’s largest counties, like Kent, listed in the first tier.

The county has enlisted Warner Norcross & Judd LLP to help prepare its case.

“The governor signed the settlement agreement that said we’re going to provide these new services to children. The existing statutes say the counties participate in providing services to children in a generic sense,” said Howell.

“If they don’t take any more steps to provide additional funding, they’d be trying to push that extra cost out to the counties. That brings up the fight with the Headlee Amendment.”

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